THE ENVIRONMENT OF ELECTRONIC

COMMERCE:
LEGAL, ETHICAL, AND TAX ISSUES
TH E LE GAL E NVI R O N M E NT
OF E L E C T R O N I C C O M M E R C E
Businesses that operate on the Web must comply with the same laws and regulations
that govern the operations of all businesses. If they do not, they face the same
penalties— including fines, reparation payments, court-imposed dissolution, and
even jail time for officers and owners—that any business faces.
Jurisdiction on the Internet
1. Governments that want to enforce laws regarding business conduct on the Internet
must establish jurisdiction over that conduct.
2. A contract is a promise or set of promises between two or more legal entities—
people or corporations—that provides for an exchange of value (goods, services,
or money) between or among them.
Conflict of Laws
Sometimes, these laws address the same issues in different ways. Lawyers call this
situation a conflict of laws. Because online businesses usually serve broad markets
that span many localities and many states, they generally look to federal laws for
guidance.
Copyright Issues
1. A copyright is a right granted by a government to the author or creator of a literary
or artistic work. The right is for the specific length of time provided in the
copyright la and gives the author or creator the sole and exclusive right to print,
publish, or sell the work.
2. The common practice of copying files from music CDs and placing those files on
a portable music device, a smartphone, or a computer raises some interesting lega
issues.
Ethical Issues
1. Online businesses are finding that ethical issues are important to consider when
they are making policy decisions.
2. A report of an ethical lapse that is rapidly passed among customers can seriously
affect a company’s reputation.
TAXAT I O N AN D E L E C T R O
NICCOMMERCE
1. An online business can become subject to several types of taxes, including income
taxes, transaction taxes, and property taxes. Income taxes are levied by national,
state, and local governments on the net income generated by business activities.